M3 Increased by $683.44M Partly due to the Festive Season

During the week ending December 25, 2014, broad Money M3 increased by LP 1,030B ($683.44M), to reach LP 176,956B ($117.38B) partly due to Christmas and New Year. M3 growth rate reached 5.94% year-on-year and 5.60% since year start. Similarly, M1 expanded LP 506B ($335.89M) due to the increase in money in circulation by LP 156B ($103.48M) and in demand deposits by LP 350B ($232.17M), respectively.

Total deposits (excluding demand deposits) increased by LP 523.93B ($347.55M), given the rise in deposits denominated in foreign currencies and term and saving deposits in domestic currency by $286M and LP 93B, respectively. Over the above mentioned period, the broad money dollarization rate edged down from 58.74%recorded in the past week to 58.65% this week. According to the Central Bank, the overnight interbank rate stood at 2.75% at the end of October 2014.

In the first TBs auction of 2015 held on the 1st of January 2015, the Ministry of Finance raised LP 181.56B ($120.44M), through the issuance of bills maturing in 3M and 6M, and 5Y notes. The highest demand was achieved on the 5Y notes that took a share of 37.81%, while the 3M and 6M bills accounted for 33.87% and 28.32%, respectively. The 3M and 6M bills yielded 4.39% and 4.87%, respectively, while the average coupon rate for the 5Y notes stood at 6.74%. Maturing T-bills exceeded new subscriptions by LP 73.57B ($48.80M).

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